Before You Hire a Contractor Make Sure they are Licensed, Bonded and Insured

Before You Hire a Contractor Make Sure they are Licensed, Bonded and Insured

Before you hire a contractor make sure they are licensed, bonded and insured!

So you need that job done at home, whether it is plumbing or that odd electrical job you still need to get a contractor to handle the job for you. Well, obviously it is important to get the correct contractor for the job but also very important to make sure they do carry a license and insurance is a very important aspect. So in this article, we will be talking about licensing bonding and insurance of contractors.

Let’s have a look at the following:

  • Licensing
  • Bonded contractors
  • Insurance


Why should you check if a contractor is licensed? The license is very important because that will tell you that the contractor you hire has undergone the necessary tests for the trades and that they do qualify to do the job you require. Basically, a license means that the contractor has the minimum requirements for the specific trades they are in. So with that being said, it is always best to make sure that the contractor you to hire for the job can show you a license.

Bonded contractors

What is bonded you might ask? Contractors are required to be bonded so they can get a license. This means the contractor needs to buy a surety bond. It serves as insurance to the customer if the contractor fails to do the job properly or fails to pay for permits or other subcontractors for that matter.

Many homeowners don’t realize that a contract is bond can protect them against any damage to the property because of contractor negligence or even stolen property by employees of the contractor.  Here is how they can benefit you.

The home owner is not the only one who benefits from the bond but the contractor as well. Most people don’t hire a contractor who does not offer the protection of a bond. A lot of suppliers or even subcontractors would normally refuse to work with a contractor who does not have a bond in place.


Let’s have a look at why a contractor needs to be insured.

Contractors normally need to be able to show proof of insurance to able to get a trade license.

Insurance is normally divided into two types.

  • Liability
  • Workers’ compensation


This normal coverage property damage and or any injuries caused by the contractor’s work.

Workers’ compensation

This normally gives payment to injured workers, no matter who was at fault in the accident, all ages all Hospital costs that is not covered by the contractor.

So always make sure that the contractor you hire is licensed, bonded and insured.

Picking the Right Contractor Bond for Your Business

Picking the Right Contractor Bond for Your Business

What is a contractor Bond?

Contractor bonds are Licenses that are required and laid down by the state to guarantee that a general contractor will operate his/her business in compliance with the rules and regulations pertaining to their specific obtained contractor license bonds.

Functions of a contractor bond.

A contractor bonds exist to protect the public from unwanted practices and unlawful behavior by a contractor. These contractor bonds acts as rules and therefore for any person interested in the success of their businesses, it is very good that you pick the right contractor bond for your businesses to be able to operate efficiently and effectively to provide good services to the potential clients and therefore if a contractor’s customer or employees are financially harmed as a result of any violation, then a bond payout may occur.

However, before a surety makes any payment on a bond, they will investigate all claims of the clients and if it is valid, they will make the payout. However if there is no payout to the clients by the surety, a contractor is responsible for repaying the surety the amount of the bond claimed and all the other legal expenses. This makes it different from an insurance company.

Advantages of picking the right contractor bond for your business

  • Provides assurance to the business that the contract bond will fulfill its contract adequately to the level of satisfaction required by the business planners.
  • Protects against any financial loss.
  • This encourages pursuit of business goals. This is because surety bonds guarantee the business owner that the contractor will perform the work for the quoted price.
  • The business will be more attractive to potential suppliers because the suppliers are ensured they will be paid regardless of financial difficulty at the contractors end.
  • Helps to avoid any dispute in contracts as it assures the business owner the work will be completed as per the contract.
  • The business will be assured by the contract bond that it has the financial capacity to withstand the risks involved in the construction of the business.

Disadvantages of contractor bonds for business

  • Incase the claims made by the business are found invalid, they will be required to pay a price higher than the bond.

In conclusion, it is very important that a business should pick a right contractor bond that they can easily operate with and to avoid any fears of the business failing.